Asian Stocks Recover as Tech Sector Stabilizes Despite US-Iran Tensions
Asian stock markets rebounded on Thursday after reversing early losses, supported by a modest recovery in technology shares and growing hopes that tensions between the United States and Iran may not escalate further.
Regional investors initially followed a weak lead from Wall Street, where technology stocks remained under pressure and stronger-than-expected U.S. inflation data weighed on sentiment. However, markets gradually recovered throughout the session as risk appetite improved.
South Korea and Japan Lead Recovery
Technology-focused markets in Asia regained some ground after suffering significant losses earlier in the week.
South Korea’s KOSPI index rose 0.2%, while Japan’s Nikkei 225 added 0.1%.
The KOSPI had previously fallen as much as 4% before recovering, helped by a rebound in shares of SK Hynix. Investor sentiment improved after reports suggested the memory chip giant plans to triple its wafer production capacity over the next decade.
AI and Semiconductor Stocks Face Growing Scrutiny
Semiconductor companies have been among the weakest performers this week as investors took profits following the strong artificial intelligence-driven rally that fueled the sector during May.
Market enthusiasm surrounding AI-related investments has cooled in recent weeks as concerns emerge over the industry’s long-term profitability and valuation levels.
Adding to those concerns, reports indicated that OpenAI is considering significant price reductions for its AI services due to increasing competition from rival Anthropic. Investors fear lower pricing could place additional pressure on profitability across the broader AI ecosystem.
Hong Kong Markets Underperform
While most major Asian indexes recovered, Hong Kong’s Hang Seng Index lagged behind regional peers, declining 1.3%.
Technology stocks were the primary source of weakness. Alibaba shares fell more than 5% amid renewed concerns about the company’s artificial intelligence growth prospects.
JD.com also came under pressure, falling more than 3% following reports that Chinese regulators were examining allegations related to misleading advertising practices.
US-Iran Conflict Keeps Investors Cautious
Despite the market recovery, investors remained focused on escalating tensions between the United States and Iran.
The United States confirmed strikes against several Iranian military targets, prompting retaliatory attacks by Tehran on American bases and allies in the Middle East.
However, market sentiment improved slightly after U.S. military officials stated that the latest round of operations had concluded, raising hopes that both sides could move toward de-escalation.
Attention also remains on the possibility of a future diplomatic agreement, although President Donald Trump has warned that additional military action remains possible if negotiations fail.
Inflation Concerns Remain in Focus
Oil prices surged following the latest developments in the Middle East, fueling concerns about rising inflation and its impact on global financial markets.
Investors are also digesting stronger U.S. consumer inflation data released this week, which reinforced expectations that interest rates could remain elevated for longer.
Market participants are now awaiting U.S. producer price inflation data for additional clues regarding the Federal Reserve’s next policy moves.
Mixed Performance Across Regional Markets
Australia’s ASX 200 erased earlier losses to trade near flat levels, while Singapore’s Straits Times Index gained 0.1%.
India’s Nifty 50 opened little changed as traders remained cautious ahead of key economic developments.
Chinese markets underperformed, with the CSI 300 index declining 0.6% and the Shanghai Composite falling 0.3%. However, both indexes recovered from their session lows as broader sentiment improved throughout the day.
